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Power Lunch

News/Business. Sue Herera, Tyler Mathisen. Today's news on the economy, markets, real estate, media and technology. New. (CC)

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Us 6, Goldman Sachs 4, Washington 4, Google 3, Usaa 3, U.s. 3, Goldman 2, John 2, Eric 2, Fbi 2, Tom Perez 2, Bny Mellon 2, Irs 2, Phil 2, Mr. Cole 2, Cnbc 1, Apple 1, On Cnbc 1, Gary 1, Peter Fisher 1,
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  CNBC    Power Lunch    News/Business. Sue Herera, Tyler Mathisen. Today's news on  
   the economy, markets, real estate, media and technology....  

    May 15, 2013
    1:00 - 2:00pm EDT  

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>> doc. >> i am hoping stephanie is right, too. don't forget to catch more fast money. power starts now. >> halftime is over. >> power lunch and the second half of the trading day starts right now. >> indeed it does. and we have a jam packed hour. we are live from both coasts with washington in between. attorney general eric holder just about ready to sit down on what is inevitably called the hot seat. we will take the question-and-answer session live. john, as you just herd .
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>> the goldman sachs coo gary kohn, the man that many think might eventually take a top position. hi, sue. >> we're going to get to the markets. >> in light of the events of the past week regarding the allegations with the irs and then the associated press scandal it will be anything but ordinary. >> handicapping this one is pretty easy. this is one of those days that
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are especially not fun. eric holder is going to get grilled on two things in particular. one is the irs scandal and the other is the question about the subpoena of phone records from the associated press in the leak investigation. eric holder spoke to both of those pubically yesterday. he rekuzed himself because he commented on it priestly. and on the irs he said he started a criminal investigation but that's not going to stop members of congress from hammering him and the administration. got a preview of that from john boehner, the house speaker. he said what i want to know is not who is going to get fired but who is going to go to jail. holder said there is a criminal investigation so that is part of it. he said i am befuddled as to why they got records to this scope
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and breadth and how they got those. there is no news in that. i suspect they will cut that short because members will want to put him on the griddle and question him about both of those matters, tiler. >> john, thank you very much. we will be monitoring these hearings. when the questioning gets underway down in washington, we will go to it live. in the meantime out in the west coast, google's developer's conference is getting underway and there is music underway regarding a new service that could be a serious threat to spotify and apple. the stock trading at $900, that's an $18 move today. john? >> tyler, pandora slipped into
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the negative. apple is down 3%. today google is up. google play music all access. the first big service announcement here. access to google's whole catalog of music. lots and lots of titles for $9.99 a month. $7.99 if you sign up before june 30th. launching in the u.s. first. this is a strike not just at apple but also at pandora's and spot if is. there are lists of music and radio stations that you can create. this is in the context that android is the strongest mobile eco-system. chrome is the strongest web browser. both of those are important platforms. also announced 900 million android activations.
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more announcements coming. sue? >> john, thank you very much. the dough is up 64 points on the trading session. nasdaq is up 9 points. the transportation average is up another 55 points. delta is saying it expects improved profits. southwest boosting its different end three to four cents a share. joining me here on the floor is bob pisani. good to see you.
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we talked about the debate on the floor about the fed tapering back. they are starting to call this the teflon market. every indicator all of the indications are a market that is way overextended. it's really kind of amazing. >> sectors are acting a little strange. i'm not sure how i feel about it. they're under pressure. i see the dollar rallying in the last few weeks.
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>> they are all down about two or three percent. given this stew, it's nice to see the stock market keeps slowly rising. i'm trying to figure out kpktly what that will be. >> the problem with the commodities. >> it's not an end user marketplace that you get to watch. it's money pouring in. stronger dollar might indicate a stronger u.s. economy. there are a lot of threads difficult to pick out. >> i would make the argument that a lot of people think that this market, the stock market is not a true market either.
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>> i couldn't agree with you more. and central banks inflating asset clazs. so we are seeing and the idea -- i think it's going to be a luxury problem to have kind of weak. we were all hopeful on friday. maybe the economy is getk better here. but it's still choppy. >> we came in this morning with gdp of china being downgraded.
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and yet here we are. >> the prettiest girl at the dance. thanks, appreciate it. >> shares down majorly, if that's a word. and forecast a record profit for the year. it warned that lingering global economic concerns and adverse weather patterns made it cautious about the outlook. there you see why deere is down. sales increasing 4%. the company is raising its quarterly dividend. 25% to 25 cents a share. nice round numbers there.
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goldman sachs driving the market high higher steve leisman is at goldman headquarters with its president and chief operating officer. >> thanks. you should have seen the smile on our put it back up. take me to gary. the coo. what do you think when you look at that chart? >> we're going to grow all over the world. you know? as we look at the opportunities set out there. >> when you think which is the
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place like you expect the best returns? if it's not double digits you're really concerned? >> i don't know if we have double digit growth anywhere. and so if each of our businesses is growing and each of the businesses is growing in market share, we're going to grow as a firm. >> let's talk about the market more broadly. >> when i look at the alternatives for money today, where it can go and where it can get a return, equities look cheap. i am concerned that we will get a reversal in interest rates and
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the inverse correlation between rates and price is going to surprise a lot of people. >> how far in advance do you position yourself for that change? the summer? a year down the road? >> we won't know for sure, i know that. we need to make sure we understand what the impact will be on us and on our client base. we need to be prepared if it is a 2013 event. >> how much concern do you have .
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>> it is having an impact? >> if the fed were to reverse course, there is different levels of the fed tapering down their purchases. would that be a signal to you to get lightener equities? >> i'm not sure i would react to the first or second taper. i think the feds got a very difficult balancing act in removing stimulus and qe from the market. it wouldn't be surprising to me if they tried little maneuvers here and there. >> david, yesterday, on cnbc said there is a massive surplus
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of fed purchases above and beyond the amount of paper being issued. could you share that? >> i saw the map that you did. we had very positive inflows. >> having a more dramatic impact. >> we talk a lot about cnbc. how much concern is there at goldman sachs which is a big user of bloomberg. >> we don't have a major concern. we talked to bloomberg about a month ago. dan is completely emersed in the
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situation. he understands the problem. >> have they told you enough? >> we're in constant dialogue. we are giving them time to understand the issue and allow them to really have real data and real information. i would rather get the truth when they know it and not have them tell me things they're not confident in. they were not 100% happen with yourlast test? >> we will address their concerns. we will resubmit as they have asked us to in the due course.
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>> what are they telling you about their level of confidence and use of their cash? >> confidence still remains somewhat low to very low depending on where you are in the world. ceos are still scared of where growth is going to come from. that's going to drive economic growth. >> we have talked to shareholders and our board. we have really strengthened the
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role of the lead director at goldman sachs. the lead director is very involved in what we do. we think that having a strong director is a great way to run goldman sachs. >> thanks for joining us today. >> my pleasure. >> coo of goldman sacks and president as well. back to sue, i guess? >> indeed it is. thank you very much. pleasure to have him on with us. we're waiting for house judiciary committee members to begin their questioning of eric holder. we will take you there live as it begins.
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>> another story we are following. jp morgan shareholders are going to vote next tuesday on whether to split the chairman and ceo roles. >> while sources say the number is still below a majority, that could still change in the
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meantime. you can see them in yellow. and they typically wait until the end of the line to cast their votes. there is a big portion of passive shareholders that automatically cast their votes along with what iss recommends. is it roughly 25% all over have all been watching the situation with keen interest saying it could happen to jp morgan it can
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happen anywhere. >> more than a majority to split the role? and can you imagine circumstances where the board would say we disregard that, he stays. >> they have that option. but at that point if the momentum is going in that direction, it does make the board look bad to evaluate any sort of update whether it's bulking up the risk or whatever. he was approved with 58.6% of the vote by shareholders. we're going to go ahead and have to replace you. >> thank you very much.
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there are growing calls for the resignation for attorney general eric holder. plus, phil lebeau with the results of a significant air travel report, lost baggage and consumer complaints. that and much more on power lunch. the dough is up 51 points. ♪
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>> the u.s. department of transportation releasing its air travel consumer report. hi, phil. >> big day for the airlines. they are off to the races. take a look at the airline index. it is up today and up 55% in the last year in part because of positive comments coming out. that always helps the airline stocks. delta saying that it seems improved 2q profit in margins.
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compared to a year ago. there are the top three the information there, not terribly encouraging. slightly higher than a year ago in march. >> as much as we dislike these fees, we are becoming more and more accepting of them. that is more than double what it was just two years ago. >> people seem to be more accepting of baggage fees. bumpings were up. >> oh great. that's all we need. thank you, phil, very much. all right.
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we are monitoring washington where attorney general eric holder is in probably the latter stages of his statement. and then of course the q&a session is expected to start. we will go there live. up next a power lunch exclusive with peter fisher. what is in store for the market next on power? n djibouti, afric. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.
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>> let's go now to washington where the questioning of attorney general eric holder has begun. >> i will begin by recognizing myself for five minutes. you, in fact, addressed in your remarks my first question which deals with the troubling information that was received by the fbi and other agencies of the government prior to the boston marathon bombing.
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all of the information, but not after. and we would like to continue to work with you and know what the department is doing to adopt procedures nor. >> we certainly want to work with you in that regard. there is an ongoing inspector general going on as to how information was or was not shared in the context you have described. i think generally the fbi did a very good job in acquiring the information that he could. i'm not certain that all of the responses or all the requests that were made to a foreign country by the fbi were replied to. this is matter that is ongoing. >> in 2010, this relates to the aftermath of the arrest of
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dzhokhar, in 2010, you indicated strong support to insure that investigators could obtain critical intelligence. you said i think we have to think about modify iing that is more consistent with the threat that we now face. can you articulate how the department would propose fixing the rules? particularly this issue of how long the fbi or other law enforcement can question somebody about imminent threats. obviously that caused consternation about the completion of question ing ing.
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>> there was a proposal that we floated out there. what i would prefer to do is work with members of congress who are interested in looking at the world as we see it now. the case dealt with somebody who was asked where's the gun. there are much more broad questions that we need to ask. who else was involved in this matter? are there other explosive devices that we need to know about? other threats that will happen not only today but in the next two or three days? it seems to me that the question
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period would be appropriate. i think that this would require interaction between the executive and legislative branchs to come up with something that would pass constitutional muster. >> it was recently reported by the justice department or reported that the justice farment obtained two months of telephone records including work and personal phone lines. why was such a broad scope approved? i was rekuzed in that matter the
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matter is being soup vised by the deputy koerj. i'm simply not a part of the case. >> one of the requirements before compelling process from a media outlet is to give the outlet notice. do you know why that was not done? >> there are exceptions to that rule. >> and the associated press refrained from releasing the story for a week. that indicates that the ap was amenable to working with you on this matter. why was it necessary to subpoena the telephone records? did you seek the ap's assistance
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in the first place? and if not, why not? >> again, i don't know what happened there with interaction between the ap and justice department. i was rekuzed from the case. >> i take it you will be forth coming with those answers to those questions as you explore why this was handle in what appears to be contrary to the law and standard procedure? >> well, again, there are exceptions to some of the rules that you pointed out. i have faith in the people who were responsible for this case .
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>> thank you, mr. chairman. i note that some of our members have been outspoken in opposition to the free flow of information act. but now i am very delighted to learn that many have changed their attitude on this.
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>> i think tom perez has been an outstanding deputy attorney general. i think he will be a great secretary of labor. there have been reports done.
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i think those findings are really important. >> i think if you look at tom perez's number, record number of cases brought against police departments that have acted inappropriately,
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inappropriately. >> i think this is very critical because much of the sagging economy that we are climbing out of is a direct result of wall street. and perhaps improper conduct and activity. can you distinguish between cases that we might bring against those on wall street who caused the financial crisis or were responsible in large part? have we an economic system in
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which we have banks that are too big to prosecute? >> i said it was difficult at times to bring cases against large financial institutions because the potential consequences that they would have on the financial system. let me make it very clear. there is no bank, no institution, no individual who cannot be investigated and prosecuted by the united states department of justice. as i indicated in my opening statement, we have brought thousands of financially based cases over the last four and a half years.
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>> can you be specific subpoenas for media? the deputy attorney general do that? >> i have to assume he did. i only say assume. you have to understand. rek kukuz kusales are such that
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don't have any interaction with those in the case. the deputy attorney general would act as the acting attorney general. >> do you know if he was also interviewed in the investigation that caused your rekuzal? >> i don't know. i don't know. i assume he was but i don't know. >> why were you interviewed? were you a witness? >> one of the people who had access to the information that was a subject of the investigation. i recused myself. we all did. i did because i thought it would be inappropriate and have a bad appearance to be a person who
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was a fact witness in the case to actually lead the investigation given the fact, unlike mr. cole, that i have a greater interaction with members of the press than he does. >> i'm a fact in the fact that i am a possessor. i was. i am of the information that was ultimately leaked. and the question is who of those people who possess that information which was relatively limited number of people within the justice department, who of those possessors actually spoke in an inappropriate way. >> who else had access to that
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information? >> this is an ongoing investigation. i would not want to reveal what i know. i don't know if there are other people who have been developed as possible recipients or possessors of that information. >> i am trying to find out who authorized the subpoena. you can't tell me that if the deputy attorney general authorized it. somebody had to authorize it because the code of federal regulations is pretty specific that this is supposed to go as close to the top as possible. >> i am fairly certain that the deputy attorney general was the one who authorized the subpoena. >> okay. the code of federal regulations is specific that there should be negotiations prior to the insurance of the subpoena with
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the news media organization involved. and the ap has said there was no negotiations at all. now there are two different parts of the regulation but there were no negotiations whatsoever. and why where there not? >> that i do not know. there are exceptions to the rule that said if the integrity might be impacted, i don't know why that didn't happen. >> but hasn't somebody in the justice department said that the integrity of the investigation would not be impacted, with negotiations under subsection c or d which is more specific? >> i don't know. let me say this. we have confirmed that the
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deputy was the one who authorized the subpoena. >> this committee has been frustrated for at least the last two and a half if not the last four and a half years that there doesn't seem to be any accepting of responsibility in the justice department for things that have gone wrong. now, may i suggest that you and maybe mr. cole and a few other people go to the trueman library and take a picture of the thing that he had on his desk that says the buck stops here? we don't know where the buck stops and i think to do adequate oversight we had better find out and find out how this mess happened. i yield back the balance of my time. >> thank you very much. >> i thank the chairman i think i will stick to three in the
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time i have. i have no doubt and we have been hearing much human crying about the department of justice program. accusing the administration put in front of grand juries and jailed to contempt. now it is convenient to attack the attorney general. >> we're going to monitor the q&a session. we're waiting to see whether or not anybody asks about the irs scandal. so far they have not. they have been focusing on the ap scandal. we will take a quick break and we will have market coverage for you and much more on the other side. [ male announcer ] my client gloria
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>> would you say there are three distinct stages that people and investors need to be aware of? the first is when the fed stops buying bonds, you need to focus on that. tell me about that. >> i think a lot are conflating these. phase one is when the fed stops easing. rates will back up when that
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happens. we're all going to look around and say are they tightening? >> and phase two is? >> when the fed says gee, the economy is doing really well. i'm going to start raising short term rates. if you wait for the fed to tell you that you missed it. phase three is when the fed says the economy is growing too fast. i want to slow it down right now. i'm going to punch the bond market in the nose and slow it down. they will try to get rates higher to slow the economy down.
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but don't conflate that into episode one. >> people are assuming that when the fed starts to taper off, that's the same as tightening and it is not. >> we're at the turn of a cycle here. rates are more likely to go up than down. but don't think they are all happening the same week, month, or year. >> how long do you think the cycle has before we see that last event? that last turn? do you have a sense? >> i thought when they kept it going the first of the year, we were going to wait and see what the sequester would do to the economy. now they are waiting to see what the second quarter looks like. that's the first time they will really be able to make a strong conclusion about how they feel about tapering.
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i think sometime over the summer and fall is when they have that first moment when they might start the tapering. clearly they have left themselveses the opening. they could speed it up or slow it down. >> the taking back of some accommodation or the tapering might hinge on that? >> he was very clear when he said the 6.5% unemployment rate, that sort of dual target they have got, that was that it would remain accommodating until the unemployment rate got down that low or inflation ticked up that high.
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at least that was the dog that didn't bark. >> thank you for your patience with all the breaking news today. we're going to take a quick break and we have a lot more ahead. the markets are holding up well. we're still monitoring the situation in washington as well. stay with us. we are back in 2. how do traders using technical analysis streamline their process?
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>> to josh lipton now. >> we're watching bristol myers here, the stock hit a 52-week high today. there is the american society of clinical oncology. they're going to release some data today. >> very much. an interesting hour. >> indeed. i thought one of the things that was interesting is how tentative
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and still concern s s. >> street signs begins now. >> some said we couldn't get much higher months ago. they were wrong. but are they right now? google is raised to 1,000 bucks a share is getting closer. the stock above 900 and its new news, music to investors' ears.